EU fails to reach IMF loan target

EU fails to reach IMF loan target

December 19th, 2011 in News

BRUSSELS (AP) - European Union finance ministers have come up $65.19 billion short of their goal of providing the International Monetary Fund with $260.78 billion to help heavily indebted nations avoid default.

The eurozone will provide an extra $195 billion to the IMF through bilateral loans, Jean-Claude Juncker, the prime minister of Luxembourg, who also chairs the meetings of the currency union's finance ministers, said in a statement Monday.

Greece, Ireland and Portugal, which have received multibillion euro bailouts, won't have to contribute to the IMF loans.

Of the non-euro countries, only Denmark, Poland, the Czech Republic and Sweden will also send extra money to the Washington-based fund, Juncker said, without giving specific amounts. P

The IMF welcomed the money late Monday. "We welcome the EU Finance Ministers' support for a substantial increase in the IMF's resources, as we work to strengthen our capacity to fulfill our systemic responsibilities to our global membership," a spokesperson said in a statement.

The failure to come up with the full amount that had been indicated at a summit of EU leaders just 10 days ago signals further rifts within the 27-country EU. At the summit, the 17 eurozone countries also agreed to set up a new treaty to create tighter fiscal rules for the currency union, which has been rocked by a debt crisis for the past two years.

The new accord was made necessary after the United Kingdom blocked changes to the existing EU Treaty. Britain, the largest economy among the 10 non-euro countries in the EU, also declined to contribute to the IMF loan target.

Instead, London signaled that it may provide more resources to the IMF through the Group of 20 framework, which most likely wouldn't be earmarked for the eurozone.

"The U.K. has always been willing to consider further resources for the IMF, but for its global role and as part of a global agreement," the office of U.K. treasury chief George Osborne said in a statement.